Avant Money launches a new mortgage today from < 2%

Gordon Gekko said:
It isn’t really.

If you’re going to lend at 1.95% into a market where it’s nigh on impossible to enforce security, it’s logical to try and manage other risks such as the size and liquidity of the relevant housing market.

People from the back of beyond never seem to want to accept this, but houses outside of the main urban centres just aren’t as desirable from a lending perspective; typically harder to value and typically harder to sell.
Click to expand...

That answer though is one size fits all because there are areas outside of Dublin and the main cities which are pockets of houses which are easy to value because they always maintain their value and are easy to sell (Long-standing sought after/desirable areas). That policy completely ignores this fact and just takes the easy option but by doing so they are losing out on some very reliable customers
 
pumba said:
That policy completely ignores this fact and just takes the easy option but by doing so they are losing out on some very reliable customers
Click to expand...

Hi pumba

But there is plenty of business for them in the main centres. They would have to assess each of these pockets separately and that would not justify the potential return.

Don't forget that they are just a month or so in the market. They may well extend it over time.

Brendan
 
pumba said:
That answer though is one size fits all because there are areas outside of Dublin and the main cities which are pockets of houses which are easy to value because they always maintain their value and are easy to sell (Long-standing sought after/desirable areas). That policy completely ignores this fact and just takes the easy option but by doing so they are losing out on some very reliable customers
Click to expand...

Why bother though?

People seem to think that these guys are fulfilling some sort of public service. They’re not.

If I was lending at 1.95% into this market, I wouldn’t touch anything outside of the main urban centres, I wouldn’t touch apartments, and I wouldn’t lend to anyone with even a tangential link to a Covid-related business.

I have heard stories of lenders looking at the accounts of the employer of a potential borrower and turning them down solely on the basis of the business losing money. Proper order. Rates at these levels imply minimal risk. Avant Money should only lend to “super prime” cases, otherwise they are mispricing risk.
 
Perhaps we are moving toward a truly differentiated market whereby banks will price more on the credit risk of the individual and the property. It will suit some more than others.
 
There are lots of people living outside the bigger urban areas that are low risk customers. Avant should look at each case individually and assess the level of risk that's involved. Of course they can lend to whoever they want, but they are certainly limiting their market. An individuals circumstances and situation is more importance than the exact location of their property. That should not be the one and only criteria they take into account. As previously mentioned one size does not fit all.
 
cuttothechase said:
There are lots of people living outside the bigger urban areas that are low risk customers. Avant should look at each case individually and assess the level of risk that's involved. Of course they can lend to whoever they want, but they are certainly limiting their market. An individuals circumstances and situation is more importance than the exact location of their property. That should not be the one and only criteria they take into account. As previously mentioned one size does not fit all.
Click to expand...

With respect, no there aren’t, and in any event how would one go about building a business based on exceptions?

No creditor wants to have to enforce on the underlying borrower; the first thing you look at is the security. And despite the protestations of people who don’t live in the city, a spectacular €700k property in the middle of nowhere is substantially less attractive to a bank than an ugly and mundane €700k semi-detached in Dublin. It’s all about the liquidity of the market.
 
cuttothechase said:
There are lots of people living outside the bigger urban areas that are low risk customers. Avant should look at each case individually and assess the level of risk that's involved. Of course they can lend to whoever they want, but they are certainly limiting their market. An individuals circumstances and situation is more importance than the exact location of their property. That should not be the one and only criteria they take into account. As previously mentioned one size does not fit all.
Click to expand...
Spending a lot of time and effort to do a detailed, individual risk assessment for properties or potential customers that are outside your defined, low risk, profiles is exactly what you don’t want todo if your target is to provide low interest rates.
you don’t care about losing out on a small number of potentially solid customers when the hassle of assessing them is too big, and risk is less manageable. You don’t care about creating a huge market share, you want to leave the more hassle business to the competition.
They are in the market to make money not to serve the public.
 
I may be losing it but what Variable Rate are Avant offering? Or what is the variable rate at end of Fixed Rate? Or are they saying another fixed rate at end?
 
Hi Dr

Here are the variable rates

< 70% LTV : 2.5%
>70% LTV: 2.75%

If you fix for 3 years with Avant, the market will be very different at the end of the three years.
If you fix for 7 years, it will be different again.

Brendan
 
Thanks BB :) - there is no tracker element this just an LTV rate?

Would the Fixed Rate portion expire exactly on anniversary?


W
 
I made some enquiries about applying to Avant. The broker flagged to me that the sector I work in would probably be viewed as a risky one by Avant (Covid impact). So to prevent me potentially wasting time on an application, the broker put in an initial call to Avant to see if they would consider my application based on my initial details.

Got a call back from the broker today to indeed confirm that at the moment Avant wouldn't consider me because of the sector I work in. Suggested I come back again in a few months to see if their view has changed.

Just sharing this as I think it's a clear example of how Avant are probably going to only consider very low risk applicants. I'm in a permanent job with a good salary and no other debt. But simply based on the industry I'm in, they're not willing to consider me just yet. For others thinking of applying, before you go to all the hassle, maybe get the broker to confirm you're not going to be wasting your time.
 
Thanks.

Now we know they are being careful with location of house and occupation of borrower.

(I'm not complaining about this, it's just good to know)

Whereas the CEO on launch day more or less rejected claims that they would "cherry-pick".
 
PolkaDot said:
For others thinking of applying, before you go to all the hassle, maybe get the broker to confirm you're not going to be wasting your time.
Click to expand...

It's not just hassle. Many of the brokers charge an application fee.

I have no problem with Avant cherry picking in country where there is no sanction for people who don't pay their mortgages. But it would be helpful if they specified what those cherries currently are.

Brendan
 
Not sure if this is standard in the current context (or outside of it), but the Avant loan offer form has the following as a "Special Condition":

Prior to draw down, the Borrowers must each provide a payslip confirming no negative changes to their employment since the original application was assessed. This payslip must be dated within 4 weeks of the date of draw down.
Click to expand...
 
banjopotato said:
Not sure if this is standard in the current context (or outside of it), but the Avant loan offer form has the following as a "Special Condition":
Click to expand...

If you think about it, it's just prudent, good practice and common sense if you're a lender. I was always baffled by the way AIB were so fussy and difficult in originally approving me for a mortgage when I first bought my house (asking for extra paperwork etc etc), yet 6 months after getting approval, when it eventually came to drawing down, they did not look for any confirmation whatsoever that my employment or financial situation had not changed materially. Crazy really. I could have lost my job one week after getting approval yet would still have been able to draw down the mortgage!
 
Has anybody found out what formula Avant use when calculating the break fee (if you were to switch away from them)?

Unlikely, I realise, that anybody has this detail with them being new to the market.
 
Compensation shall be calculated in accordance with the following formula:

C = (A x (F1 -F2) X D)/365

A = the amount repaid early (or the amount which is changed from the fixed rate to a new rate) averaged from the date of early repayment (or rate of change) to the end of the fixed rate period to allow for scheduled repayments (if there any) and interest charges.

F1 = the annual percentage interest rate, which was the cost to Avant Money of funding, at the time of origination, for an amount equal to A for the period starting at the date of early repayment to end of the fixed period.

F2 = the annual percentage interest rate which is the cost to Avant Money of funding an amount equal to A for the period equal to D at the time of the early repayment.

D= the number of days from the date of early repayment (or rate change) to the end of the fixed period.

If C is zero or a negative number, no amount is to be paid to Avant Money.
Click to expand...
 
You must log in or register to reply here.
Back
Top